Exxaro delivers resilient interim results

Diversified miner, Exxaro Resources reported a mixed set of interim results for the six months ended June 2026, with robust cash generation and continued strength in its coal and renewable energy businesses partially offset by a sharp decline in equity-accounted income from its stakes in Sishen Iron Ore Company (SIOC) and Black Mountain, which operates an underground base metal mine.

Revenue rose 7% to R22.1 billion, while earnings before interest, taxes, depreciation, and amortisation (Ebitda) held broadly steady at R5.6 billion despite inflationary pressures. The firm said this reflected the defensive characteristics of the coal and energy portfolio.

The firm reported a 20% decline in headline earnings per share to R13.77, driven chiefly by a 39% fall in adjusted equity-accounted income to R1.4 billion.

The bulk of that weakness came from Black Mountain, where earnings collapsed to just R1 million from R289 million a year earlier, hit by higher production costs and a slower ramp-up at Gamsberg, an open-pit zinc mine and processing facility located in the Northern Cape .

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Sishen’s results were negatively impacted by stronger rand weighing on the rand value of dollar-denominated iron ore earnings  with above-inflationary increases in key mining input costs compared to the prior period.

The lower earrings was offset by the first-ever contribution from Exxaro’s newly acquired manganese interest, Tshipi, which added to earnings for four months and marked a further step in diversifying the group’s income base beyond coal.

However, coal remained the standout contributor. Production rose 11% to 21.5 million tonnes, aided by stronger output at the Matla and Grootegeluk operations, while total sales increased 4% to 19.9 million tonnes due to higher Eskom offtake at Matla and improved export volumes.

Export sales rose 15% to 3.9 million tonnes, helped by better performance from Transnet Freight Rail, even as constraints on the Waterberg line persisted.

Unit costs rose 4.6% to R681 a tonne, broadly in line with inflation.

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Exxaro renewed its long-term coal supply agreement with Eskom for Matla coal station, alongside a 19-year extension of the mine’s mining right, securing the operation’s role in South Africa’s energy supply for years to come.

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In results commentary, it said that higher and more volatile oil prices had bought a  “renewed focus on the importance of energy security, resulting in a more pragmatic approach in the role of coal as a reliable and dispatchable energy source”.

Despite the earnings decline, the board approved an interim dividend of 700 cents per share, extending Exxaro’s run to 47 consecutive dividends since listing in 2006.

Cennergi, the group’s renewable energy business, grew generation 12% to 378 gigawatt-hours, underpinned by the Lephalale Solar Project, which reached commercial operation in April and has already cut Grootegeluk’s reliance on Eskom power by 30%. But Exxaro cut its full-year renewables output guidance after weaker-than-expected wind at Cennergi’s Amakhala Emoyeni and Tsitsikamma facilities.

Exxaro also posted its best safety performance since listing, with four consecutive years without a fatality.

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